No need for new banks

Says a former finance minister

Mashiur Rahman, economic affairs adviser to the prime minister, speaks at the inaugural of a two-day conference organised by the Bangladesh Institute of Development Studies (BIDS) at a hotel in Dhaka yesterday. M Syeduzzaman, former finance minister; Mohammed Farashuddin, former governor of the central bank, and KAS Murshid, director general of the BIDS, were also present. Photo: Star

Star Business Report

Setting up three more new banks will not bring any good for the banking sector as the existing ones are already weighed down by large volume of non-performing loans, said a former finance minister yesterday.

M Syeduzzaman said: “57 banks are too many considering the size of the economy. So, there is no need to allow any more new bank.”

He spoke at the inaugural of a two-day conference organised by Bangladesh Institute of Development Studies at Lakeshore Hotel in Dhaka.

Syeduzzaman said the central bank's supervision and monitoring system on the banking sector is not well enough which has contributed to the increased trend of default loans.

The ratio of non-performing loans in the state-run banks is much higher than that of private commercial banks because of the former's weak business performance, he said.

“We should pay more attention to the banking sector with a view to strengthening its financial health,” said the former finance secretary.

Syeduzzaman also said the flow of foreign direct investment has yet to reach a satisfactory level because of the absence of required infrastructural facilities.

Mohammed Farashuddin, a former governor of the central bank, said the banking sector has expanded significantly but Bangladesh Bank has failed to strengthen its supervisory capability to catch up with the expansion.

He said, “Default loans in the banking sector are still less than those in a number of neighbouring countries. There are many methods to control NPLs.”

Mashiur Rahman, economic affairs adviser to the prime minister, said new avenues should be discovered to invest remittance in the productive sector as the hard-earned money sent by the migrant workers is used for consumption.

He also said regulatory commissions have significant role in fixing and resetting the prices of electricity and gas and call rate of mobile phones.

“We should think whether the commissions have acquired skills and quality necessary to take decisions properly in this regard.”

KAS Murshid, director-general of the BIDS, presided over the session.

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